This is the reason I am wary of depositing my money in an IRA. If I have a 401k by the end of the year I will not be able to deduct the money I put into the IRA on my taxes which takes a lot of the benefits away (Hey, even in my tax bracket that is a savings of approximately $500).

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Actually, you can deduct IRA contributions even if you have a 401k but only if you meet certain income criteria. If your adjusted gross income (AGI) for `96 was $25k or less then you can deduct a full $2k IRA contribution. If your AGI is $35k or more than you can't deduct your IRA contribution. If AGI is something in between then you can deduct a portion of your contribution.